Question 26
You have just assessed an investment proposal, involving an immediate cash outflow followed by a series of cash inflows over the next 7years, by deducing the NPV and the IRR. You have now discovered that you have underestimated the discount rate.
Correcting the underestimation will have the following effect, relative to your original deductions:
Question 27
An organization has the right to mine for gold on its land. The price of gold and the cost of extraction are such that mining is not currently financially viable. However, the organization has the right to commence mining at any time in the future if the price of gold increases and makes mining financially viable.
This right to commence mining in the future is an option to:
Question 28
Risk management can be represented as a four step process. The four steps, shown randomly, are:
1. Establish appropriate risk management policies.
2. Risks are identified by key stakeholders.
3. Risks are monitored on an ongoing basis.
4. Risks are evaluated according to the likelihood of occurrence and impact on the organization.
Which of the following is the correct order for the four steps?
Question 29
Which TWO of the following are reasons why cost-based approaches to transfer pricing are often used in practice?
Question 30
The following data are available for four projects with unequal lives.
A 10% discount rate is appropriate for all four projects.
Which project has the highest equivalent annual benefit?